State, Amazon discuss Internet retailer collecting sales taxes

State officials are negotiating with Amazon on a new deal under which the Internet retailer could agree to collect Tennessee sales taxes from its customers at some point in the future, House Majority Leader Gerald McCormick says.

McCormick, R-Chattanooga, said Monday he expects an agreement to be reached before next year’s legislative session when some lawmakers have threatened to push a bill to require Amazon to collect the tax for online purchases.

“Amazon is in discussions with the [Tennessee] Department of Revenue on the sales tax collection issue,” McCormick said. “I do think that, in the end, they will be a taxpaying entity in Tennessee and pay our sales tax, not immediately, but I think at some point they will pay the sales tax.”

The governor’s office said “discussions with Amazon are ongoing” but wouldn’t elaborate. Amazon did not respond to a request for comment.

Under a deal with Gov. Bill Haslam’s predecessor, Phil Bredesen, Amazon agreed to locate two distribution centers in southeast Tennessee if the state wouldn’t require the retailer to add the sales tax to customers’ bills. After taking office in January, Haslam said he would abide by that agreement.

That set off a controversy in last year’s session [1], with brick-and-mortar retailers like Wal-Mart saying the exemption puts them at a competitive disadvantage.

Senate Finance Committee Chairman Randy McNally, R-Oak Ridge, sponsored legislation to require Amazon to collect the tax. Since the session, he has proposed that the state give Amazon a two- or three-year grace period before requiring the tax collections.

Last week, Amazon announced plans for a third Tennessee distribution center — this one in Lebanon. The company said the facility will create hundreds of full-time jobs and that it plans to open the site this fall.

Many other states are in disputes with Amazon over sales taxes. On Friday in Congress, Sen. Dick Durbin, D-Ill., introduced legislation requiring Amazon to add sales taxes to customers’ bills. Rep. John Conyers Jr., D-Mich., plans to introduce a similar measure in the House.